Traparco Pty Ltd (as trustee of the KW Mackenzie “I” Trust) v Pescott

[2017] VSC 649

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S CI 2014 02206

IN THE MATTER of an application by TRAPARCO PTY LTD (ACN 005 088 559) for judicial advice and directions under O 54(2) of the Supreme Court (General Civil Procedure) Rules 2005 and Orders under s 51 of the Trustee Act 1958

TRAPARCO PTY LTD (ACN 005 008 559) (who applies in the capacity of trustee of the KW Mackenzie “I” Trust)	Plaintiff
v
CAROLINE MARGARET PESCOTT (and others according to the attached Schedule)	Defendant

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JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	By written submissions 2, 17, 18 and 23 October 2017
DATE OF JUDGMENT:	14 November 2017 (Orders made on 3 November 2017)
CASE MAY BE CITED AS:	Traparco Pty Ltd (as trustee of the KW Mackenzie “I” Trust) v Pescott
MEDIUM NEUTRAL CITATION:	[2017] VSC 649

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TRUSTS AND TRUSTEES – Judicial advice and directions – Trustee Act 1958, s 51 – Supreme Court (General Civil Procedure) Rules 2005, O 54(2) – Civil Procedure Act 2010.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S S Wotherspoon	Thomson Geer
For the First, Fourth and Fifth Defendants	—	Millens
For the Ninth and Tenth Defendants	—	Aitken Partners

HIS HONOUR:

Introduction

1. These proceedings, commenced in 2014, concern, what can only be described as, an intricate structure of trusts and other arrangements, the KW Mackenzie “I” Trust being pivotal.  During the years which followed, the Court has provided judicial advice on a number of occasions which culminated in the approval of a Scheme for resolving outstanding matters with respect to the KW Mackenzie “I” Trust and related trusts and arrangements in the interests of all existing and potential beneficiaries in a fair and balanced manner.  Orders with respect to this Scheme were made on 6 December 2016.

1. Since the approval of the Scheme, it has been necessary for the trustees to take further steps to implement its provisions and the endorsement and approval of the Court is sought pursuant, insofar as is relevant, to the provisions of s 51 of the Trustee Act 1958 and O 54(2) of the Supreme Court (General Civil Procedure) Rules 2015. None of the parties to these proceedings oppose orders sought by the Plaintiff as trustee of the KW Mackenzie “I” Trust which are intended to resolve all outstanding matters with respect to the implementation of the Scheme and otherwise with respect to that Scheme.

Previously outstanding matters

1. On 13 October 2017 the first, fourth and fifth defendants (“the Pescotts”) withdrew the two allegations they had raised in connection with the implementation of the Scheme as modified.  The Pescotts advised the Court that they no longer opposed the Plaintiff’s draft orders which were circulated on 18 August 2017 (“the draft Orders”).

1. Paragraph 6 of the draft Orders provided:

Save that the Plaintiff is entitled to have recourse to the assets of the KW Mackenzie “I” Trust to pay the reasonable costs of and incidental to this hearing, there be no order as to costs.

[Plaintiff’s emphasis]

1. The contextual circumstances surrounding the proceedings have changed since the Plaintiff circulated draft Orders on 18 August 2017.  The Plaintiff says that it has been put to considerable trouble and expense in defending the Pescotts’ allegations which were raised on 25 August 2017.  As a result, the Plaintiff said that it was no longer able to support paragraph 6 of the draft Orders insofar as it includes the emphasised words, “there be no order as to costs”.

1. The Court enquired whether the Plaintiff’s application might be resolved on the papers.  As a result of correspondence between the parties, which culminated in an email from the Pescotts on 18 October 2017, it was agreed that determination could take place on the papers.  Indeed, as the Plaintiff contends, this would, in my view, lead to the just, timely and cost-effective resolution of the proceeding in accordance with the overarching purpose of the Civil Procedure Act 2010; and was a proper course in all the circumstances.

1. In terms of the draft Orders, the Plaintiff submitted that their effective date should be 26 October 2017 and that, save for the issue of costs, they would effectively achieve implementation of the Scheme as modified and, consequently, finality for the parties.  The outstanding issue with respect to the draft Orders was, however, a question of costs.

Costs

1. Section 24(1) of the Supreme Court Act 1986 provides:

Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

1. The Supreme Court (General Civil Procedure) Rules 2015, r 63.15 provides:

Unless the Court otherwise orders, a party who discontinues or withdraws part of a proceeding, counterclaim or claim by third party notice shall pay the costs of the party to whom the discontinuance or withdrawal relates to the time of the discontinuance or withdrawal.

1. The Plaintiff pressed its claim for costs in submissions to the Court. The Pescotts, it says, have withdrawn the whole of their case concerning allegations of misconduct by the Plaintiff and two of its officers. It was submitted that r 63.15 should be applied to the costs thrown away by reason of that withdrawal. Thus, the Plaintiff sought its costs of taking the 15 steps directed to the implementation of the Scheme. The Plaintiff also sought the immediate taxation of its costs and disbursements, and in default of agreement, payment forthwith. For the sake of clarity, it is noted that the Plaintiff sought no order against the first Defendant, an undischarged bankrupt.

1. Subsequently to the making of submissions to the Court on the issue of costs, the parties have advised that all outstanding issues have now been resolved by agreement.  As a result, the draft Orders have been revised to accommodate the now agreed position (“the Orders as now agreed”).

1. Having regard, particularly, to the nature and complexities of these proceedings, the parties (including trustees) and their advisers are to be commended for reaching this position—in the interests of all concerned, and in conformity with legislative purpose of and obligations provided for in the Civil Procedure Act.  This is also an outcome a court of equity should endorse in relation to the proper and efficient administration of trusts in the interests of all concerned.

Conclusion

1. For the preceding reasons, the Orders as now agreed by the parties will be made as sought.  Those Orders are set out in the Annexure to these reasons.

ANNEXURE

Orders as now agreed

THE COURT ORDERS THAT:

1. It would not be improper for the Plaintiff to declare that Caroline Margaret Pescott, her husband Roger Neil Pescott and their children Edward Ponsonby Pescott and Oliver Hyde Pescott, together with any remoter descendent of Caroline Pescott and any eligible trust or eligible corporation in which Caroline Pescott, Roger Neil Pescott, Edward Ponsonby Pescott or Oliver Hyde Pescott has an interest, be excluded from the class of primary beneficiaries and beneficiaries under the KW Mackenzie “I” Trust.

2. On or before 10 November 2017 and following payment to EOP Investments Pty Ltd under cl. 2(e) of the Deed of Settlement dated 30 November 2016, the remaining assets of the KW Mackenzie “I” Trust be vested in a successor trustee, Oity Pty Ltd, a corporate trustee controlled by the Second and Third Defendants.

3. On 10 November 2017 the Plaintiff be discharged from its office as trustee of the KW Mackenzie “I” Trust and is discharged from the further performance of its powers, discretions, obligations and duties as trustee of the KW Mackenzie “I” Trust.

4. Save that the Plaintiff is entitled to have recourse to the assets of the KW Mackenzie “I” Trust to pay the reasonable costs of and incidental to this hearing, there be no order as to costs.

5. A copy of these Orders are to be served upon the persons previously given notice of these proceedings:

   (a)by service on the legal practitioners last known to be acting on behalf of any such person; or

   (b)by sending them to the last email address for that person known to the Plaintiff’s solicitors (where the person does not retain legal practitioners).

SCHEDULE OF PARTIES

TRAPARCO PTY LTD (ACN 005 088 559) (who applies in the capacity of trustee of the KW Mackenzie “I” Trust)

Plaintiff

and

CAROLINE MARGARET PESCOTT

First Defendant

ELIZABETH GEORGINA MACKENZIE

Second Defendant

FIONA JENNIFER MORRIS

Third Defendant

TRALANDO PTY LTD (ACN 155 128 920)
(as trustee for the Caroline Trust)

Fourth Defendant

TRALANDO NO. 2 PTY LTD (ACN 165 238 040)
(as trustee for the Caroline No. 2 Trust)

Fifth Defendant

KENNETH WILLIAM MACKENZIE, a person under disability,
by his litigation guardian Timothy James Alexander Dickson

Sixth Defendant

EDWARD PONSONBY PESCOTT

Seventh Defendant

OLIVER HYDE PESCOTT, a minor, by his litigation guardian,
Roger Neil Pescott

Eighth Defendant

ROBERT HUGH DAVEY
(in his capacity as trustee of the KW Mackenzie “A” Trust)

Ninth Defendant

TIMOTHY JAMES ALEXANDER DIXON
(in his capacity as trustee of the KW Mackenzie “A” Trust)

Tenth Defendant